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Staying The Course In Strong Currents: Saying No To The CEO and The Art & Ethics Of Advising Strong Corporate Clie

Plenary 1. American Bar Association Forum on the Construction Industry. 2012 Fall Meeting. Staying The Course In Strong Currents: Saying No To The CEO and The Art & Ethics Of Advising Strong Corporate Clients. Mark Baker Fullbright & Jaworski , LLP. Moderator: Buckner Hinkle, Jr.

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Staying The Course In Strong Currents: Saying No To The CEO and The Art & Ethics Of Advising Strong Corporate Clie

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  1. Plenary 1 American Bar Association Forum on the Construction Industry 2012 Fall Meeting Staying The Course In Strong Currents:Saying No To The CEO and The Art & Ethics Of Advising Strong Corporate Clients Mark Baker Fullbright & Jaworski, LLP Moderator: Buckner Hinkle, Jr. Stites & Harbison, PLLC David Delman Hogan Lovells US, LLP Paul A. Bruno Fluor Corporation

  2. Plenary 1 American Bar Association Forum on the Construction Industry 2012 Fall Meeting UP THE LADDER AND OUT THE DOOR How to Say “No” to the CEO A One-Act, Two Scene Play Mark Baker Fullbright & Jaworski, LLP Moderator: Buckner Hinkle, Jr. Stites & Harbison, PLLC David Delman Hogan Lovells US, LLP Paul A. Bruno Fluor Corporation

  3. A Visit to a Mega Mining Project Goes South Scene 1 • Commercial, governmental and union bribery Scene 2 • A troubled project in financial melt-down and no one cares to come to grips with reality Question presented What are the obligations of internal and external counsel when confronted with credible evidence of illegal conduct or breach of fiduciary duty under SOX Section 307 and the ABA Model Rules 1.13 and 1.6

  4. Hypothetical 1 – The Pay-Offs • Bribes paid to private company executives to secure a privately financed project • Bribes paid to government officials to secure business licenses, building permits, and entry visas for foreign workers • Bribes paid to union officials to allow foreign workers on the project and to ensure labor peace

  5. Hypothetical 1 – The Pay-Offs Is commercial bribery illegal? • Yes – The Travel Act Is bribery of foreign government officials illegal? • Of course – FCPA, subject to a “facilitating” defense Is bribery of foreign union officials illegal? • Probably – Taft Hartley and the Travel Act

  6. Hypothetical 2 - Burying the Bad News • The project is a year late, but the official project schedule shows on time • Cost increase = $180m, offset by “claims” against the owner • Liquidated damage exposure $110 • Banking covenants will be breached if claims are not recovered and liquidated damages are paid • Senior project personnel have over-stated the chances of success on the claim, and under estimated the chances of payment of liquidated damages

  7. The Obligations of Counsel • SOX 307 – minimum standard of professional conduct • Lawyers as “gatekeepers” of corporate legality • Material violations of securities law or breaches of fiduciary duty must be reported “up the ladder” • ABA model rules of professional conduct • 1.13 (organization as client) • 1.6 (confidentiality of information)

  8. Consequences if SOX is followed, consequences if it is not. • Resist • Retire • Resign • Sued by Shareholders

  9. American Bar Association Forum on the Construction Industry 2012 Fall Meeting Break…

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